The limitation of the free movement of persons and goods within African countries inhibits informal, micro, small, and medium enterprises from fully participating in intra-Africa trade as promoted by the African Continental Free Trade Agreement (AfCFTA). The AfCFTA goal is to boost intra-African trade by up to 33% and cut the trade deficit by 51%. Intra-trade in Africa is meager at less than 15% of total trade compared with other regions like Europe and Asia, where intra-region export accounts for 60 to 70%, respectively. In much of Europe, nationals enjoy extensive rights to free movement. If properly implemented, the agreement will create a single African market of over a billion consumers with a total GDP of over $3 trillion.
Free movement will aid economic growth by bringing in new skills and contributing to human capital development and technological and agricultural progress. For Micro, Small, and Medium Enterprises (MSMEs) and entrepreneurs, moving freely with their goods and services around Africa can help grow their businesses and contribute to economic development.
Promoting trade within Africa is essential to allow African countries to develop the competitiveness and productivity of goods and services currently produced on the continent. If MSMEs, entrepreneurs, and the informal sector are expected to benefit from the AfCFTA, free movement is imperative. The free movement of people in Africa will improve business and investments—another goal of AfCFTA.
While other factors affect the free movement of people and goods, this article focuses on three: restrictive visa policies, poor roads/railway networks, and insecurity.
Restrictive visa policies
The first factor that limits free movement is the visa request policies enforced by some African countries. According to the AFDB’s Visa Openness Report 2016, Africans need visas to travel to 55% of other African countries. Visa openness facilitates people’s free movement, enabling them to conduct their businesses easily, quickly, and with minimum cost. Currently, forty-six percent of countries on the continent still request visas to transact businesses. To push for the free movement of people, the African Union (AU)—the Free Movement Protocol established the African Economic Community relating to the free movement of persons and right of residence—seeks to promote free movement.
The protocol gives nationals of member states the right to enter, stay, move freely, and exit the territory of another member state without the requirement of a visa in accordance with the state’s laws. Some African countries have not fully implemented this protocol, providing obstacles for MSMEs’ full participation in trading within Africa. Some countries on the continent have implemented the Free Movement Protocol. For example, countries within the Economic Community of West African State (ECOWAS) accept member states’ passports without any visa requirement, and this has contributed to the movement of people in the region.
The Free Movement of person protocol can aid in increasing intra-African trade if implemented across the continent, meaning a Nigerian national can easily travel to Namibia or vice versa without any visa requirement. The protocol has the propensity to enhance the movement of MSMEs and young entrepreneurs around Africa, thereby increasing their access to new markets, promoting sustained economic growth, impacting employment, and reducing poverty. A report by the African Development Bank noted that tourism in Seychelles increased by 7% annually when the country abolished visas for African Nationals. The same report by AFDB noted that since Rwanda eased its visa requirement in 2013, cross-border trade with Kenya and Uganda increased by 50%.
A single visa or a valid travel document recognized by all African governments can end the prevalent restrictive visa policies on the continent. A higher visa openness allows all African countries to move freely across the continent, transact businesses, and contribute to tourism. The abolishment of visas for African nationals will enable small businesses to expand, aiding growth in the national economy.
Poor roads/Insufficient railway networks
The second factor that limits the free movement of MSME owners is poor road and railway networks. Roads are especially important for informal cross-border trade which can account for up to 90% of official trade flows in some countries and contribute to up to 40% of total trade within regions. Africa has approximately 31 kilometers of paved road per 100 square kilometers of land in comparison to 134 kilometers of paved road in other low-income countries. Long-distance national and international roadways in sub-Saharan Africa need to be developed to allow connectivity between nations and urban cities.
According to the World Bank, “up to 100,000 kilometers of roads are required to provide intracontinental connectivity in Africa.” Poor roads and lack of intra-connectivity make it difficult to move within regions and across Africa. Poor roads delay the movement of goods and services and can cost MSMEs and entrepreneurs a lot of money and time. For example, when roads are not paved or are filled with potholes, driving takes time.
A trip that should take four ends up taking almost double the time or more. Traveling by air is costly and for MSMEs who have limited cash on hand, roads offer the most affordable means of transport. Road conditions and dealing with customs at different border points sometimes discourage road travel. More entrepreneurs would trade across Africa with better road infrastructure and harmonized custom rules.
While there has been an increase in road projects all over Africa, more needs to be done to connect and pave roads to support increased trade regionally and across the continent. One project, a high-speed railway project endorsed by the African Union, is in the conception stage. The project seeks to achieve three objectives: interconnecting landlocked countries, connecting regions of Africa together, and establishing a trans-Africa beltway. This railway project’s goal is to connect the 16 landlocked countries in Africa to seaports and other neighboring countries to boost economic growth. Connectivity through roads and railway networks makes it easy for business owners to move around, especially for the informal sector, which accounts for 50% of Africa’s employment.
Insecurity
The third factor that limits the free movement of MSMEs and entrepreneurs is insecurity, primarily in the form of armed conflicts, terrorism, and xenophobia.
Armed Conflicts – there were at least 15 countries with active armed conflicts in sub-Saharan Africa in 2019. Conflicts in places like Libya, Somalia, Ethiopia, Nigeria, Mali, the Democratic Republic of Congo, and the Central African Republic affect the region. Conflicts reduce trade flows, affect the free movement of people, lead to forced migration and the destruction of infrastructure which can make AfCFTA not reach its full potential.
Terrorism – Africa currently hosts several terrorist groups. They operate across the Sahel in Libya, Tunisia, Algeria, Nigeria, Chad, Somalia, Mali, and Kenya. These terrorist groups disrupt the free movement of people, especially small and informal businesses that are involved in cross-border trades by posing a danger to travelers. Terrorist groups also prevent people from traveling and cause fear among people. In addition, there are kidnappings, killings, rapes, etc. that terrorists carry out which prevents free movement.
Xenophobia – Protectionism affects the free movement of people as countries and citizens are protective of their countries—for example, the xenophobic attacks against foreigners, especially African nationals, and their businesses in South Africa. Many foreign-owned shops and properties were looted or burnt in xenophobic attacks in the past. Reprisal attacks were carried out in Nigeria, Zambia, and other African countries on companies connected to South African citizens. The attacks and counterattacks are a barrier to the idea of free movement of goods and services and the promotion of intra-Africa trade on the continent.
Conclusion
The AfCFTA is supposed to be a ‘game-changer’ for stimulating intra-African trade. MSMEs and informal businesses are a huge part of Africa’s business environment. A real game-changer trade agreement should impact small businesses. It will be difficult for MSMEs and the informal sector to trade with the current challenges to free movement. By addressing the factors affecting free movement by air and land, we increase the chances for MSMEs and entrepreneurs to fully benefit from the agreement.
Free movement will give entrepreneurs incentives to set up businesses and trade across countries and regions. The freedom to travel and move goods across the continents can boost the economic integration of Africa, which is in line with the AfCFTA’s objectives. Thus, to encourage intra-African trade and boost economic development, governments and stakeholders should address the limitations on free movement.
